Analog Devices, Inc. · NASDAQ:ADI
Analog Devices — Investor Presentation (March 2011)
34 slides from Analog Devices's investor presentation, Mar 30, 2011
Slide 1: The World Leader in High Performance Signal Processing Solutions
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Slide 2: Safe Harbor Statement
This presentation contains forward-looking statements, including with respect to expected financial results, sales growth and customer demand, business strategy, market share, cost-reduction efforts, capital spending, expected dividend payments, and expected market conditions. Such forward- looking
Slide 3: Today's Presenters
2 Today's Presenters David Zinsner Chief Financial Officer of ADI since January 12, 2009 Chief Financial Officer at Intersil 2005 - 2008 Bill Martin Treasurer and Director of Mergers and Acquisitions since 1993 Assistant Treasurer from October 1991 - March 1993 Manager of Treasury Finance from March
Slide 4: Key Investment Highlights
3 Key Investment Highlights Highly diversified business model with broad exposure to multiple products, customers, end markets and geographies Leading market position with attractive growth prospects Highly-proprietary products with long product life cycles and high margin profile Efficient cost str
Slide 5: What Does Analog Devices Do?
4 What Does Analog Devices Do?
Slide 6: Experienced Management Team
5 Experienced Management Team 132 Years of Combined Service With ADI President & CEO Jerry Fishman CTO Sam Fuller, VP Human Resources Bill Matson, VP Legal Marnie Seif, VP Core Technologies Mass Markets Market Segments WW Sales Finance Dave Zinsner, VP Core Products & Technologies Robbie McAdam, VP
Slide 7: Worldwide Standard Linear Analog IC Consumption by End Market
6 Worldwide Standard Linear Analog IC Consumption by End Market 2004 - 2014E ($Bn) Long product life cycles Proprietary products Large customer base Strong customer loyalty High fragmentation Stable ASPs 2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E Communications 3.805 4.568 5.333 5.21
Slide 8: With Superior Analog Market Characteristics
7 .... With Superior Analog Market Characteristics Worldwide Semiconductor Industry Revenue Analog ? Less Volatile 0 50 100 150 200 250 300 350 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 ($) Average Digital Downturn (14%) Average Analog Downturn (7%) Digital ? More Vo
Slide 9: 2010 Global Standard Linear Analog IC Market
8 2010 Global Standard Linear Analog IC Market: $19.0 Billion Highly Fragmented Competitive Landscape Texas Instruments Analog Devices Nat Semi LTC Maxim STM ON Semi Intersil Fairchild NXP Other Source: iSuppli, 1Q 2011 update
Slide 10: Product and Customer Diversification
9 Product and Customer Diversification Over 60,000 total customers No customer represents more than 4% of total revenues The top 20 customers accounted for approximately 32% of revenues in FY2010 ? ? ? Customer Diversification Product Diversification Greater than 60% of product revenue is proprietar
Slide 11: End Market Diversification
10 FY2010 Revenue: $2.8 Billion End Market Diversification I&I 1266.5 Communications 595.7 Consumer 513.3 Computer 53 Automotive 333 Automotive 333 Computer Industrial and Instrumentation Industrial Automation Instrumentation Aerospace / Defense Security / Surveillance Building Automation Energy Hea
Slide 12: Attractive End Market Outlook
11 Attractive End Market Outlook Market ADI 5-Year CAGR Projected (%) Macro Trends Industrial and Instrumentation >8 Energy, Automation, Security, Asia Healthcare 10 to 14 Imaging and Portability Automotive 10 to 12 Safety, Infotainment, Power train Communications Infrastructure >10 Capacity, Covera
Slide 13: Long Product Lifecycles
12 Year of Release FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 Long Product Lifecycles ADI Analog Products Source: Company data
Slide 14: Converter Market Share
13 Converter Market Share (%) Source: Databeans: 2010 Data Converters, published June 2010 46 TI 19 Maxim 6 Linear 4 National 3 STMicro 3 Fairchild 3 Intersil 2 NXP 1
Slide 15: High Performance Amplifier Market
14 High Performance Amplifier Market Company ADI 2005 19.6 2006 20.5 2007 19.8 2008 21 2009 22.2 High Speed, High Precision, Instrumentation Amps ADI Share of Total Amplifier Market (%) Source: Databeans: 2010 Amplifier and Comparators Report, published May 2010 Converters 40 Amplifiers 60 2009 Worl
Slide 16: Fab-Lite Manufacturing Strategy
15 Fab-Lite Manufacturing Strategy Diversified manufacturing strategy utilizing internal and external capabilities Internal capacity where process technology matters and product life cycles are long; external capacity for everything else Analog chip manufacturing does not require leading edge factor
Slide 17: ADI's Financial Model
16 ADI's Financial Model Stable, consistent revenue growth High margins Low capital spending High cash flow conversion Strong operating leverage Positioned effectively for recovery or continued recessionary environment Emphasis on organic growth and a conservative acquisition strategy ? ? ? ? ? ? ?
Slide 18: Solid Long Term History of Revenue Growth
17 Solid Long Term History of Revenue Growth... Revenue ($MM) Sales FY94 773.5 FY95 941.5 FY96 1193.8 FY97 1243.5 FY98 1230.6 FY99 1450.4 FY00 2577.5 FY01 2276.9 FY02 1707.5 FY03 2047.3 FY04 2633.8 FY05 2037.2 FY06 2250.1 FY07 2429.7 FY08 2582.9 FY09 2014.9 FY10 2761.5 1994 to 2010 Revenue CAGR: 8%
Slide 19: Strong Margin Profile
18 Strong Margin Profile (%) Gross Margin OPBT FY92 46.8 4.6 FY93 47.3 9.4 FY94 49 13.2 FY95 50.7 16.8 FY96 50.3 19 FY97 49.9 18.8 FY98 47.8 12.8 FY99 49.3 16.7 FY00 56.7 29.8 FY01 55.7 17.9 FY02 53 6.9 FY03 54.9 18.3 FY04 59 26.6 FY05 61.7 22.8 FY06 61.9 23.4 FY07 62.1 23.4 FY08 61.1 24.2 FY09 55.5
Slide 20: Increasing Operating Leverage
19 Increasing Operating Leverage (%) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 TTM OPBT Drop-Thru % 35 13 -9 6 28 25 38 51 62 50 49 40 83 75 75 79 75 TTM Non-GAAP Operating Profit Drop-Thru (%) Source: Company data Note: Metric reflects results from continu
Slide 21: Attractive Relative Operating Performance
20 Attractive Relative Operating Performance ADI vs. SOX and S&P Index Averages Operating Margin Gross Margin CY 2010 ADI 66.3 SOX 47.5 S&P 500 32.9 CY 2010 ADI 35 SOX 21.6 S&P 500 12.8 (%) (%) Source: ADI 10Q's - Continuing Ops. SOX and S&P500 provided by FactSet Market Aggregates SOX S&P 500 SOX S
Slide 22: Low Capital Spending Requirements
21 Low Capital Spending Requirements ($) FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 CAPEX $'s 65.7 67.2 90.9 212.7 234.1 179.4 166.9 77.5 274.8 297.2 57.4 67.7 146.2 85.5 129.3 141.8 157.4 56.1 111.6 CAPEX as a % of Revenue 11.6 10.1 11.8 22.6 19.6
Slide 23: Leads to Significant Free Cash Flow Generation
22 ....Leads to Significant Free Cash Flow Generation Free Cash Flow ($MM) FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 95.7 -2.4 -90.4 106.3 71.2 364.9 429.7 546.4 168.7 365.2 631.8 587.2 491.8 678.6 512 376 879.6 12.4 -0.3 -7.6 8.5 5.8 25.2 16.7 24 9.9 17.8
Slide 24: High Cash Flow Conversion
23 ....and High Cash Flow Conversion Source: Company data. Note: FY05-FY10 free cash flow & net income metrics include results from discontinued operations and are calculated as a percentage of revenue, including revenue from discontinued operations. (1) Free Cash Flow defined as Net cash provided b
Slide 25: ADI Free Cash Flow Trend vs. Other A Rated Semis
24 ADI Free Cash Flow Trend vs. Other "A" Rated Semi's (%) CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 ADI 27 19 27 17 25 30 Intel 23 14 20 15 19 26 Texas Instruments 19 8 27 21 18 19 Applied Materials 18 18 20 12 12 16 Broadcom 15 22 18 19 22 18 % of Sales ADI Intel Texas Instruments Applied Ma
Slide 26: Key Investment Highlights
25 Key Investment Highlights ? ? ? ? ? ? ? Highly diversified business model with broad exposure to products, customers, end markets and geographies Leading market position with attractive growth prospects Highly-proprietary products with long product life cycles and high margin profile Efficient co
Slide 27: Appendix
yt The World Leader in High Performance Sig process Sone ————— ae Appendix
Slide 28: Historical Income Statement
27 Historical Income Statement FY05 (1) FY06 (1) FY07 (2) FY08 (1) FY09 (1) FY10 (1) Revenue (Continuing Operations) ($) 2,037 2,250 2,465 2,583 2,015 2,762 COGS 781 856 957 1,006 896 963 Gross Profit 1,256 1,394 1,508 1,577 1,119 1,799 Sales (%) 62 62 61 61 56 65 R&D 429 460 510 533 447 492 Sales (
Slide 29: Historical Balance Sheet
28 Historical Balance Sheet FY05 FY06 (1) FY07 (1) FY08 (1) FY09 (1) FY10 Cash and ST Investments ($) 2,706 2,128 1,081 1,310 1,816 2,688 Trade Receivables 321 295 324 315 301 387 Inventory 326 338 324 315 253 277 Net PP&E 600 555 556 567 477 473 Goodwill and intangibles 167 288 303 247 257 257 Othe
Slide 30: Historical Cash Flow
29 Historical Cash Flow FY05 FY06 FY07 FY08 FY09 FY10 Net Income ($) 414 549 497 786 248 712 Depreciation and Amortization 155 172 155 153 140 121 Stock-based Comp Net of Tax Benefit - (106) 32 32 49 51 Working Capital and Other (Inc.) / dec 104 19 144 (54) (5) 107 (Gain) / Loss on Sale of Business
Slide 31: Non-GAAP Financial Measures
30 This presentation includes non-GAAP financial measures for prior periods that are not in accordance with, nor an alternative to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any
Slide 32: Reconciliation of Non-GAAP Financial Information
31 Reconciliation of Non-GAAP Financial Information Source: Company data Reconciliation of GAAP TTM Operating Income From Continuing Operations (Operating Profit) to Non-GAAP TTM Operating Profit Reconciliation of GAAP TTM Operating Income From Continuing Operations (Operating Profit) to Non-GAAP TT
Slide 33: Reconciliation of Non-GAAP Financial Information
32 Reconciliation of Non-GAAP Financial Information Table of Reconciliation of GAAP Net Income (from Continuing Operations) to Non-GAAP EBITDA Table of Reconciliation of GAAP Net Income (from Continuing Operations) to Non-GAAP EBITDA Table of Reconciliation of GAAP Net Income (from Continuing Operat
Slide 34: The World Leader in High Performance Signal Processing Solutions
‘The World Leader in High Performance Signal Processing Solutions 5 nga (Se: | i a thew | ANALOG nl | DEVICES’